India overtakes Hong Kong as world’s 4th largest stock market by m-cap

Driven by a sustained rally in the last two months, India's stock market has become the world's fourth-largest equity market in terms of market capitalisation, surpassing Hong Kong for the first time. The total market value of shares listed on Indian exchanges touched $4.33 trillion, exceeding Hong Kong's $4.29 trillion on Monday, according to data compiled by Bloomberg. The United States is the world's biggest stock market with a m-cap of $50.86 trillion, followed by mainland China and Japan with a m-cap of $8.44 trillion and $6.36 trillion, respectively.

India’s stock market capitalisation crossed the $4 trillion mark for the first time on December 5 on the back of a strong rally, aided by encouraging global cues, strong corporate earnings, as well as expectations of healthy macro-economic data points. The BSE-listed firms achieved the $1 trillion m-cap milestone in May 2007, while the $2 trillion mark was breached in July 2017; and $3 trillion in May 2021.

Sunil Nyati, managing director, Swastika Investmart, says that a stark contrast has emerged between the Indian and Hong Kong markets in recent years, which can be attributed to several converging factors. One of them is India's economic resurgence that has propelled it to the top of the global growth charts, while China and Hong Kong grapple with slowing momentum.

“Political and policy stability, coupled with improved corporate governance practices, further bolster India's appeal. Conversely, China and Hong Kong face investor anxieties due to policy uncertainties. Consequently, foreign institutional investors (FIIs) are increasingly shifting their focus towards India, seeking refuge from the turbulence in the Chinese and Hong Kong markets,” Nyati adds.

Shauryam Gupta, CEO, Rupeezy, says that the landmark achieved by the Indian stock markets is a testimony to its robust macroeconomic fundamentals duly reflected by the strong corporate results. “The Indian markets will see even better days ahead as FIIs continue to increase their stakes. The retail participation in the stock markets is at an all-time high, still growing, but far behind the developed world. With eight consecutive years of positive closures, it will not be a surprise if India becomes the second-largest stock market as the next two have given almost stagnant returns."

In the calendar year 2023, overseas funds infused over $21 billion into the Indian share market. The year 2023 was historic and memorable for the Indian equity market as it scaled new height despite sharp volatility in the first half amid inflation and interest rate jitters, while geo-political tensions and Adani-Hindenburg saga further added to the woes of the market. Following a corrective phase in the first half, Dalal Street staged a smart recovery in the second half amid positive macro indicators, dovish policy stance by the RBI, improvement in foreign fund inflows, as well as ease in geopolitical risks and inflation. In CY23, the BSE Sensex surpassed the 71,000 market for the first time, and the NSE Nifty crossed the 21,000 level, with both indexes gaining around 17%. So far in January, the stock market has crossed 73,000 levels, while it is expected to hit 74,000 marks in the run up to Lok Sabha elections due early this year. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)